Why Some Iowans Register Their RV’s in Montana
Montana. The Cayman Islands for RV owners. No that is a phrase I've never heard before and was quite certain I'd never have to type. But the state of Iowa is cracking down on some RV owners who are taking advantage of Montana laws, and avoiding paying registration fees on their RVs here in Iowa.
The state of Iowa is one of several in the U.S. cracking down on RV owners. The Cedar Rapids Gazette reports that the state has already recovered more than $1 million in unpaid tax and registration fees. A law change that goes into effect on July 1st is expected to channel more money into the underfunded Road Use Tax Fund. So why Montana?
The state of Montana does not charge sales tax. The Gazette reports that some Iowans who purchase an RV, then set up a limited liability corporation in Montana to register their RVs in that state, and avoid paying the 5% tax and registration fee here in Iowa. Why? Well %5 adds up quick when you're talking about expensive RVs in excess of $100,000. But the penalty if you get caught is even steeper, up to 75% of the value of the RV.
Officials with the Montana Department of Justice say they don't know for sure how many Iowans register their RVs in their state, because all the information they see shows Montana addresses. The Gazette reports that while Iowa may deem it illegal, the state of Montana considers it "lawful to establish and LLC for the sole purpose of titling and registering vehicles here."
Officials in Iowa hope the law change this summer gets more RV owners to be in compliance. And that means fewer Montana plates on RVs at Iowa football games.